ME- Portfolio on War Footing
Investment Conclusion
President Trump has shifted his stance to demanding “unconditional surrender” of Iran. If this is not just rhetoric or a negotiating ploy, it opens the way to escalation of the war. Israel and the US would then share a common war aim: regime change in Tehran. There would be no pause for negotiation.
Even if this war aim is dialled back at some stage, it is likely to be after Iran is severely damaged economically and military. In a nutshell this would mean that the Mullahs would have no stake in the game to maintain orderly oil markets or limit Iranian escalation.
It is time to add to our already big stock of safe haven assets (listed in the Wealth Preservation Portfolio) at the end of this note. Oil is now (belatedly being added). The price could go to the mid US$ 90s/bbl. A negotiation pause would have meant better prices to buy oil. But that is now doubtful.